Rhode Island

The Employees' Retirement System of Rhode Island administers pension benefits for nearly all state employees, public school teachers, and employees of political subdivisions. The system maintains separate plans for state employees and teachers, municipal employees, state police, and judges. The State Investment Commission invests the assets of the System.

In late November 2011, the Rhode Island legislature approved changes to the state pension system, including moving to a hybrid retirement plan. Employees contribute 5 percent of pay for the defined contribution plan and 3.75 percent for the defined benefit part of the plan. The new plan potentially reduces the system's unfunded liability to $4.3 billion, down from $7.3 billion.

Authorizing Statute

According to Chapter 36-8-2 of the Rhode Island Statues,

§ 36-8-2 Establishment of system. – A retirement system is hereby established and placed under the management of the retirement board for the purpose of providing retirement allowances for employees of the state of Rhode Island under the provisions of chapters 8 – 10 of this title. The retirement system so created shall begin operation as of July 1, 1936. It shall have the power and privileges of a corporation and shall be known as the "employees' retirement system of the state of Rhode Island", and by that name all of its business shall be transacted, all of its funds invested, and all of its cash, securities, and other property held.

Retirement Board

§ 36-8-4 describes the makeup of the Retirement Board:

The membership of the retirement board shall consist of: the general treasurer or his or her designee who shall be a subordinate within the general treasurer's office; the director of administration or his or her designee who shall be a subordinate within the department of administration; a representative of the budget office or his or her designee from within the budget office, who shall be appointed by the director of administration; the president of the league of cities and towns or his or her designee; two (2) active state employee members of the retirement system or officials from state employee unions to be elected by active state employees; two (2) active teacher members of the retirement system or officials from a teachers union to be elected by active teachers; one active municipal employee member of the retirement system or an official from a municipal employees union to be elected by active municipal employees; two (2) retired members of the retirement system to be elected by retired members of the system; and four (4) public members, all of whom shall be competent by training or experience in the field of finance, accounting or pensions.

Board Composition

Contributions

According to the U.S. Census, in FY 2015, employer contributions to Rhode Island government pension plans were 5.90 percent of all state and local government direct general spending.

Constitutional Protections

No explicit constitutional protection exists for public pension benefits, but courts protect contractual pension rights based on impairment of contract principles. Nonnenmacher v. City of Warwick, 722 A.2d 1199 (R.I. 1999) (vested contractual rights might not be violated where the impairment caused by a change in benefits is "not substantial"); Rhode Island Council 94 v. Carcieri, 2011 WL 4198506, *1 (Trial Order)(R.I.Super. Sep 13, 2011)(statutorily-created pension system establishes a contractual relationship with the state; trial court denied defendant's' motion for summary judgment after plaintiffs challenged benefit and COLA reductions). (Rl CONST., Article 1, §12) Source: Robert Klausner, Esq., State Constitutional Protections for Public Sector Retirement Benefits